Yesterday, Rattan Khosa and I attended the Chicago Booth School of Business’s management conference titled “The Future of Markets.” The conference included a panel discussion, breakout sessions and a special forum.
The panel discussion was moderated by Ray Saurez, author and senior correspondent of PBS ‘The NewsHour,’ and the acclaimed panel included Professors Gary Becker, Marianne Bertrand, Steve Kaplan, Anil Kashyap, Kevin Murphy and Raghuram Rajan. Their discussions about the current economic condition were not only informative but also spirited. The panel focused on the importance of human capital as a key driver of economic growth and strength. Other topics included opinions of government bailouts and the unintended consequences of government regulation. I took away that while markets are not perfect, they should be allowed to self-correct mistakes but that temporary government intervention may be necessary to overcome market failures. Additionally, we need to solve the K-12 education and family structure issues nowin order to decrease U.S. poverty in the future.
After the panel discussion, I attended a session headed by Prof. Joseph Pagliari that was titled ‘Commercial Real Estate: Where have we been and Where are we heading?“ Prof. Pagliari lectured about core vs. non-core real estate, the effects of leverage (taking on debt), and institutional joint ventures. Without getting too technical, the effects of leverage were extremely positive when real estate values were increasing, and had the opposite effect in the past 18 months. The bottom-line is that the commercial real estate has not bottomed-out yet and that the bottom may last 1-2 years, a sentiment that I agree with.
Finally, Dean Snyder and Prof. Eugene Fama, the “father of modern finance,” chatted about the efficient market theory. The discussion revolved around the stock market and whether it was better to be a passive investor (buy and hold index funds) or an active investor. Conceptually, it is probably better for the average unskilled investor to be a diversified passive investor.
– Neel Khosa, AMSYSCO Inc.
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